Total investments in the energy system of the Baltic States and Poland have reached almost EUR 2 billion, with vital support from the European Commission, awarding funds from European structural funds. AST investments in the implementation of the synchronisation project have reached EUR 500 million, of which more than EUR 300 million are comprised of funding successfully secured from EU structural funds funding studies, and the infrastructure and IT project. The synchronisation project is mostly co-financed from CEF structural funds.
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Since 2014, more than EUR 260 million have been allocated from the Connecting Europe Facility (CEF) (hyperlink to EU funding section) for the implementation of important infrastructure reinforcement projects. The synchronisation project is included in European development documents and has received maximum co-financing in the amount of 75%. Within the framework of the synchronisation project, grant agreements have been concluded with the CEF co-financing administrator - the European Climate, Infrastructure and Environment Executive Agency (CINEA) for synchronisation 1st and 2nd phase projects. |
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EUR 98.3 million was allocated as part of the RePowerEU (hyperlink to EU funding section) project as part of Latvia's Recovery and Resilience Facility plan, which support coordinating trans-border and national infrastructure planning and funding, as well as energy projects and reforms. |
Synchronisation of Baltic grids with continental Europe will increase energy independence and the reliability of electricity supply regionally, at the same time fostering the development of Europe's internal energy market development, and creating new business opportunities. Consolidation of the Latvian and Baltic power transmission grid with European Union funding is a package of measures that, in additional to ensuring the reliability and stability of the power transmission grid, will enable the transmission grid to safely connect large-scale energy sources and to the fulfil the objectives of Europe's Green Deal.
Since 2014, when the CEF programme was approved, with CEF co-financing AST has implemented several major infrastructure consolidation projects, which will ensure the reliable and stable operation of Latvia's power transmission grid, including the Baltics operating in synchronisation mode continental Europe:
- The Kurzeme ring – 55.5 million EUR CEF co-financing. More detailed information about the project is available here.
- Third Latvia-Estonia electric interconnection – EUR 51.2 million CEF co-financing. More detailed information about the project is available here.
- Rīga TEC2 – Rīga HES 330 kV line project – 7.3 million EUR CEF co-financing. More detailed information about the project is available here.
The biggest support from CEF structural funds has been allocated to the Baltic States' synchronisation project with continental Europe and desynchronisation from Russia's unified electricity system. The synchronisation project is divided into two phases, where the first phase involves measures to consolidate the Baltic States' transmission grid, whereas the second phase of the synchronisation project involves inter-country projects and projects required to ensure synchronisation mode.
First phase of the synchronisation project
For the first phase of the synchronisation project to strengthen the power transmission grid, the Baltic States received co-financing of EUR 322.8 million, which is 75% co-financing out of total expenditures amounting to EUR 430.4 million. As part of this project, Latvia was allocated EUR 55.3 million for reconstruction of two 330 kV power transmission lines from Valmiera – Tartu and from Valmiera – Tsirguliina respectively, construction of one synchronous condenser station and construction and modernisation of frequency management and control equipment.
Second phase of the synchronisation project
For the implementation of the main projects in the 1st stage of the second phase of power grid synchronisation, in 2020 the Baltic States and Poland received EUR 720 million from CEF structural funds, which is maximum possible amount of co-financing, i.e. 75%. This funding is awarded for urgent power grid synchronisation projects, i.e. installation of synchronous condensers in the Baltics, modernisation of Poland's power grids, as well as for the construction of an additional interconnection "Harmony Link" from Lithuania to Poland. Latvia was allocated EUR 55.5 million for construction of two synchronous condenser stations.
Subsequently, in 2022, Baltic and Polish electricity transmission system operators signed a grant agreement with CINEA regarding the allocation of funding totalling EUR 170 million from CEF2 programme structural funds for projects in the second stage of the second phase of synchronisation of the Baltic power grids. Poland was allocated EUR 75 million, Lithuania EUR 31 million, Latvia EUR 37 million, and Estonia EUR 27 million. These funds are required for consolidation of the power transmission grid in Poland, construction of battery energy storage systems in Latvia, modernisation of counter-emergency automated systems in Latvia, as well as for improvement of the dispatcher management and information technology system in the Baltic States. The total costs of projects in the second stage of second phase of synchronisation reached EUR 230 million of which 75% or EUR 170 million were funded by the CEF. Funds have been allocated to Latvia for construction of battery energy storage systems, modernisation of inter-country commercial metering, counter-emergency automated systems and IT system modernisation.
In the aftermath of the war in Ukraine commenced by Russia in 2022, the energy sector also faced challenges with changing logistics chains and rising equipment material costs, which also affected the costs of the synchronisation project in Latvia. In order to reduce the impact of the synchronisation project on the transmission tariff, AST secured funding for part of the project from Recovery and Resilience Facility RePowerEU. On 26 September 2023, the Republic of Latvia's Cabinet of Ministers approved a decree "Regarding an Addition to Latvia's Recovery and Resilience Facility Plan", which within the framework of the RePowerEU project will provide AST with funding in the amount of EUR 73.2 million, where EUR 60.2 million are provided for synchronisation activities.
Overall, it is estimated that the costs of the second phase of the synchronisation project will be about EUR 1.2 billion, of which EUR 521 million will be investments in Poland, EUR 462 million in Lithuania, EUR 131 million in Latvia, and EUR 111 million in Estonia.